Sunday, May 31, 2015

In Barnet lately (and across the country
thanks to a petition on change.org), there has been a movement among
residents of local council estates who fear being moved away from the area due
to gentrification. The movement gathered a lot of momentum, with 200,000
signing the petition.

The Wednesday before last, they went to the Barnet
Council AGM with the intention of delivering their petition. This plan was
known before the AGM, and it seems that someone decided to mobilise the
police to prepare for the dangerous event of handing over a few boxes of paper.

Upon arrival we were
shocked to find police vans and stacks of metal barricades waiting for
us. We tried to join the AGM but were prevented from
entering the town hall altogether. No reason was given but security guards and
police blocked our entrance.

Through the course of the evening it became
clear that select invites had gone out and the 'public' filling the galleries
had been pre-chosen.

Cllr Richard Cornellius, the head of the council
offered to accept our petitions but would only see two members from each
campaign group. He failed to then present this to the
AGM meaning that our petitions went unrecognised and undiscussed by our elected
councillors.

Our West Hendon petition alone represents the largest petition in the history of Barnet, along with Sweets way. Over 200,000 peoples views went unheard and unrecognised that evening.

Is this what constitutes democracy and
accountability in 2015?”

Indeed.

Meanwhile, the same group that
organised this petition has discovered that the Government’s Minister for
Housing is, in fact, a landlord. Yet another ministerial appointment that
cannot possibly have at heart the interests of the bulk of the people they
supposedly represent.

Tuesday, May 26, 2015

Despite being educated to past degree level, I have no formal training in economics whatsoever.

I haven't sought out statistics on this but – since students in the UK specialise upon entry to university and the subject is not taught in most schools – I expect that I share this lack of economic education with the vast majority of the nation's population.

Which is unfortunate, because so much of modern political discussion hinges on questions of economics: the National Debt, the deficit, austerity, credit ratings, government bonds, bailing out the banks, house prices, pensions, funding the NHS, costs of EU membership,... major issues all, and the list goes on and on.

What has galvanised me into action is a recent realisation that there is an astonishing discrepancy between what we're led to believe by the media and are told by politicians, and the economic reality. In part, this has arisen through straightforward deception: for instance, David Cameron's claim in 2014* to be 'paying down' the National Debt when in fact it continued to rise throughout the coalition's term in office. The government can get away with this sleight of hand, however, because of the public's unfamiliarity with economic concepts; in this case, the difference between reducing the deficit and paying down the debt. Economic ignorance (which, I hasten to add, is not meant as a slight but as a reflection of the failings of schooling), together with the counterintuitive reality, has made the entrenchment of fallacious ideas almost inevitable.

However, it gets worse. Not only do politicians and the media struggle to understand the modern economy, so too it seems do many economists. Despite having the experience of the Great Depression of the 1930s to inform their judgement, mainstream 'neoclassical' economists failed to anticipate the financial crisis of 2007/08. The theories upon which their models were built did not allow them to foresee such an eventuality. These weren't just theoretical concerns: the flawed theories go some way to explaining US Federal Reserve chairman Ben Bernanke's failure to foresee the crisis in time to prevent its worst impacts.

In the immediate aftermath of the crash, many economists – including Alan Greenspan (chair of the Federal Reserve until 2006) – claimed that no-one could have predicted it. Indeed, only a very small minority thought about the economy in such a way that they were able to foresee the coming crisis, understanding the importance of credit flows, debt growth and banking. Dirk Bezemer, at the University of Groningen, identified twelve economic analysts who made a timed prediction of a real estate crisis and subsequent recession (PDF).

In time I hope to learn more about the insights of all of the analysts and economists listed in Bezemer's paper. One in particular, however, has set out his criticisms and proposed alternatives to the flawed neoclassical theories and models that failed to predict the financial crisis at length and in an accessible manner: Professor Steve Keen.

Keen published his first edition of Debunking Economics in 2001. I described in a previous post how that 2001 edition contained several predictions that would turn out to be remarkably prescient a few years later, and the second edition (pictured), which was published in 2011, has been updated accordingly and substantially expanded.

As an 'economic novice', based on the above reasoning I have determined that this is the right place to start building a worthwhile and useful understanding of the discipline. I hope that "Blogging 'Debunking Economics'" will aid my comprehension of the concepts, and perhaps a few other readers might benefit from them also...

*Making this even worse, he made the claim despite having been rebuked by the UK Statistics Authority for saying the same thing (equally untruthfully) the previous year!

Friday, May 22, 2015

During his lifetime, Vincent van Gogh (1853–1890) was a marginal figure in the art world, little-known outside of his immediate circle. After his death, he would go on to become one of the most influential and revered figures in 20th century painting.

Hyman Minsky grew up in the US during the Great Depression of the 1930s, and lived until 1996. Like van Gogh, he remained on the margins of his field, macroeconomics, throughout his life. Eschewing mainstream economists' assumptions of dispassionate rationality on the part of lenders and borrowers, Minsky instead proposed a hypothesis of financial instability, based on a distinction between three types of borrowers

'Hedge' borrowers - borrowers who can cover their debts with current cash flows from investments

'Speculative' borrowers - borrowers who can cover the interest payments for their debts, but not the debt itself, with current cash flows from investments

'Ponzi' borrowers - borrowers who can cover neither the interest nor the debt with current cash flows, but must instead rely on their investments increasing in value to enable them to finance the debts

You can read more about Minsky's financial instability hypothesis here (PDF). Hopefully, though Minsky himself was not around to see it, the relevance of his hypothesis in a world reshaped by the financial crisis of 2007-08 is clear from the above!

Steve Keen,an Australian economist who is currently professor of economics at Kingston University, UK, is one of a very select group who predicted the financial crisis before it hit. In the first edition of his book Debunking Economics, published in 2001 and focused on critiquing mainstream economic orthodoxy, Keen wrote that the US was vulnerable to a debt-induced recession (pg254) and predicted the potential of the limits on budget deficits imposed by the Maastricht Treaty to worsen the impact of the recession in the Eurozone (pg212-13).

Keen, informed by his study of Minsky, understood the roles of speculation and private debt in generating instability in a way that other mainstream economists, who failed to anticipate the crisis, did not.

So, what does Professor Keen have to say about the economic policies of the UK government – and, for that matter, the "austerity-lite" proposed by candidates for the post of leader of the opposition – in 2015?

You can't think about the economy and the government's role in the economy like a child might think about a household budget, which is all that's being sold by politicians of both sides...

By focusing on [public debt], and trying to reduce [it], they're likely to first of all push the economy into another slump, but also - if they actually succeeded in holding that level of surplus they're both fantasising about, they'd cause the next financial crisis that way - or, cause a serious decline in economic activity.

They certainly won't cause what they both argue it'll cause, which is sustained economic growth.

If more economists and politicians had listened to Steve Keen in the 2000s, perhaps the financial crisis could have been avoided. Hopefully it's not too late to change course and prevent the next one...

Monday, May 18, 2015

The candidates who have so far announced that they are standing for the Labour leadership are an underwhelming bunch. Those who aren't tainted by association with the Blair/Brown years (Burnham, Cooper) are, by all indications, little more than Tories with different coloured rosettes.Liz Kendall, who if the bookies are anything to go by is the likeliest of the up-and-coming candidates to give those New Labour stalwarts a run for their money, had no hesitation in conceding crucial ground to the right-wing economic narrative that Labour "spent too much money"; a major setback in the fightback against the fallacious Tory line on the economy precisely when it should be combated most strongly.

Meanwhile, surprise hopeful Mary Creagh launched her campaign in the Daily Mail, pitching her campaign at "aspirational voters and small businesspeople". While she appears to be preferable to Kendall in that she has not given the Tories a helping hand by attacking her own party's economic record in office, it's hard to see what a Labour party led by her has to offer low-wage workers, disabled people and the jobless, and easy to envisage it being squeezed by a resurgent Liberal Democrat party.

Indeed, under the leadership of Tim Farron (the less said about Norman Lamb the better, judging by his dismaying showing on the Sunday Politics yesterday in which he claimed - to Andrew Neil's bewilderment - that Labour "bankrupted the country"), it's not unforeseeable that the Lib Dems could end up as the strongest opponent of the Tories economically as well as socially by the time 2020 rolls around.

While the distinctly uninspiring candidates battle it out for the dubious prize of leadership of the Labour party in 2015, over on the other side of the Atlantic something genuinely exciting is transpiring.

The race to be the Democratic nominee to succeed Barack Obama as President was expected to be a walkover for Hilary Clinton, and she is still expected by most to win the nomination. However, the unexpected entry into the race of Vermont senator Bernie Sanders has galvanised activists, raising $3 million in small donations to his campaign in just four days after announcing his candidacy. Even if his chances are slim, by his presence in the debates he will have a much-needed impact.

Sanders, a self-described democratic socialist, has consistently spoken out against America's plutocracy; in 2010 going so far as to speak for eight and a half hours in the Senate to stall a tax cut for the richest Americans and speak out against gross income disparities

This is a rigged economy, which works for the rich and the powerful, and is not working for ordinary Americans … You know, this country just does not belong to a handful of billionaires - Bernie Sanders (Guardian)

We here in the UK, and the Labour Party in particular, badly need a Bernie Sanders of our own right now. But, whoever could that be?

Sunday, May 17, 2015

Hello. I'm Glenn, a Labour supporter (further to the left of the political spectrum than Ian), and formerly blogged as the Boiling Kettle. I'm a programmer who lives and works in London.

Like many people, I woke up on Friday
extremely disappointed and quite angry. There are a few ways of dealing with
this – scrawling obscenities on war memorials, for example – but the prospective
leaders of the Labour party are at a fork in the road.

In my opinion, Labour suffered in the
Election because their plan wasn’t really cohesive. “It’s a choice between the
Tories’ failing plan, and our better plan” was their cry, and it failed to
convince enough people. Below this uninspiring headline was a set of policies
that, viewed with 20/20 post-election hindsight, didn’t quite match up.

The mansion tax, while a noble idea in
principle, didn’t win them many friends in London. While campaigning, I spoke
to a man whose semi-detached house in Chiswick was set for a new tax, despite
not exactly being luxurious. Perhaps it could be reformed to somehow take into
account a house’s value relative to its location.

Meanwhile, their stance on immigration,
surely aimed at placating those considering a vote for UKIP, was simultaneously
weak from a right-wing perspective (no fixed limit) and harsh from a left-wing
perspective (no benefits for 2 years). While making ambitious promises about
the NHS (a GP appointment within 48 hours), the overall £2.5bn funding pledge fell some way short of the Lib Dems, instead being comparable with the £2bn pledged by the Conservatives.

So, Labour have a choice to make. They can
creep further towards the centre, in an attempt to win voters from the
Conservatives directly (although they've already suffered criticism for being "Tory-lite"), or they can swing
to the left, to provide a real alternative to the Tories and Lib Dems.

I believe that going hard left is the best
chance Labour have to win in 2020.

The main reason for this is that there’s a
huge part of the electorate out there that hasn’t been sufficiently convinced
to vote by either “Tory lite” Labour or the Greens (or any other party, for
that matter). A charismatic, left-leaning leader could bring them out of the
woodwork.

The disparity between opinion polls and the
election result can be explained by “lazy socialists” not voting. The turnout in England and Wales was a paltry 65%, compared to 71% in Scotland, where the SNP, promising an end to austerity and a
true alternative to the big three, achieved a landslide victory. If Labour take
a leaf out of the SNP’s anti-austerity book, they can galvanise the electorate
and win the next election.

The SNP were carried on a wave of Scottish
nationalism following the independence referendum; while Labour obviously won’t
have this opportunity, they can instead rely on statistics. Austerity has been shown not to work. By promoting this message with the graphs to back it up,
they can do two things that they utterly failed to do this time around: expose
the Tory plans as ideological, and weaken the right-wing media’s case against
them.

Questions will be asked about where the
government’s spending money will come from without austerity. These can be
fielded by being honest and up-front about figures; perhaps a “fully costed”
plan will help Labour here.

Of course, should the Conservatives succeed
in their ideological dismantling of the welfare state, the landscape could be
different in 2020 to the point where people aren’t talking about austerity. In
that case, Labour can propose something which the Tories would never be trusted
to do: restore our public services, and bring back the NHS.

Saturday, May 16, 2015

The importance of music in nourishing political movements, speaking truth to power and catalysing thought across the world can scarcely be overstated. The Saturday Sound series is intended to celebrate meaningful music from a range of genres.

Here in the UK, folk singer/songwriter Leon Rosselson is deservedly among the most highly-regarded, with a 50-year back catalogue that includes numerous celebrated protest songs. This is his response to the outcome of the 2010 election...

Wednesday, May 13, 2015

After his article went viral in the UK, as might be expected he received a lot of critical responses. To address these, he followed up with another thorough post, addressing "13 Terrible Tory Counterarguments".

I subsequently posted on Benjamin's new Facebook page a 14th counterargument that I anticipated receiving in making the points that Labour weren't to blame for the recession and that austerity wasn't the answer in 2010:

Doesn't Gordon Brown promising "no more boom and bust" reveal that Labour didn't know what they were doing with the economy?

Benjamin very kindly wrote the following response, and has given me permission to reproduce it here:

When Brown said this, he was referring to a particular kind of British problem that Brown liked to associate with the Tories in his speeches, which he called "boom and bust". This is a refrain he repeated many times going back to the 90s. (Guardian)

By "boom and bust", he meant the bouncing up and down of British performance independent of the global economy under Thatcher and Major, not global macroeconomic cycles. Here's annual GDP under Thatcher & Major.

In comparison, under Labour pre-crash, there was more consistent growth, with annual rates never exceeding 5% or falling under 1%.

Brown's defense is that the 08 recession is a global crisis, not a product of UK policy, and that before the crash, the IMF estimated that the UK would be fine provided there were no international shocks. In 06, it estimated that the deficit would continue to fall during the crisis period.

The full report is interesting--the IMF was remarkably enthusiastic about Brown's economic policy pre-crash. In particular, it praised the government for its economic stability and consistency, and it denied that the UK was overheated, claiming it was at full employment.

But because of the global crisis, Brown's comments about UK performance relative to the rest of the world have been misconstrued as a bombastic claim that there would never be a global crash ever again. In fairness, Brown left himself open to this by choosing to use unnecessarily bombastic rhetoric (similar to when he claimed to have "saved the world").

Monday, May 11, 2015

First, the most famous of the three. Paul Krugman is a US-based Professor of Economics, probably best known for having been awarded the Nobel Prize in Economics in 2008 for his work on international trade. He strongly opposes austerity, and has written several articles dealing specifically with British fiscal policy.Must-read: The Austerity Delusion(Guardian, Apr 2015)Simon Wren-Lewis is a Professor of Economics at Oxford University, specialising in fiscal policy. He blogs at Mainly Macro, and has coined the term "mediamacro" to describe the fallacious economic ideas that pervade popular discourse here and in the US.Must-read: Mediamacro Myths: Summing Up(Mainly Macro, Apr 2015)

Benjamin Studebaker doesn't have the academic credentials of the two above, but what he does have is a gift for synthesising and communicating economic data. His comprehensive critique of the coalition's economic record was widely shared before the election, and I for one hope he has started as he means to go on!Must-read: For the love of God, please stop David Cameron(Benjamin Studebaker, May 2015)

Sunday, May 10, 2015

I actually wasn't going to start blogging straight away, but then I saw this in my Twitter feed thanks to Tim Stanley.

This post from Rebecca Roache at Practical Ethics, entitled "If you’re a Conservative, I’m not your friend" exemplifies the antithesis of what this blog is about.

The hope—expressed by some liberals—that political change can happen by keeping debate open is somewhat optimistic, and perhaps even deluded. We hand-wringing, bleeding-heart lefties need to change tack.

The frustration expressed is understandable, but the outcome of disengagement from people who vote Conservative is to increase the echo-chamber effect by ensuring they only hear the points of view of those they already agree with.

People do change their minds. I certainly have, on many things. But it takes shared understanding and empathy, starting from common ground and working from there. Confrontation and name-calling are counterproductive, and so is disengagement. If you want the outcome of the next election to be different, don't follow Rebecca Roache's example.

Update: Just now, a very relevant piece by Rupert Myers has been posted to the Guardian's Comment Is Free. Well worth a read.

The broad aims of The Hand & Mouse are outlined simply: to promote liberal egalitarianism and democracy, and oppose greed, division and demonisation.

My intention is for The Hand & Mouse to be a political blog with a difference. To that end, the policy for both contributors and commenters is no personal attacks. Attack ideas, positions and arguments, not people.

It's about constructive political debate, coming up with ways to educate people and change their minds. It's about doing what works, not what feels good at the time. No-one ever changed their mind on an issue, or the way they vote, because someone got in their face and called them stupid or evil.

It's not about being wishy-washy and not treading on any toes. Strong language isn't a problem. Arguments can, and will, be robust and rigorous without descending into ad hominems.A word about freedom of speech

I'm sure at some point I'll post about freedom of speech, and then someone will call me a hypocrite for prohibiting personal attacks. So, I'll get my response in pre-emptively. The Hand & Mouse is my space, my club, and commenters are invited to contribute subject to following my rules. If you don't like those rules you're free to respond on your own blog, tweet about the post, make a video and put it on YouTube...

Contributors

About the authors

Ian: Occasional political blogger, motivated to restart by the outcome of the 2015 election and the need for more reasoned debate and less polarisation. Believer in egalitarianism and in personal freedom. I don't call myself a libertarian any more these days.

Newcastle - Oxford - London - Macclesfield

Glenn:First blogged about student protests in 2010, now back in search of a platform for his left-wing views. Supports voting reform and the NHS. Against austerity and TTIP.